Moldova Country Dialogue 2002

July 18, 2002 - July 23, 2002Chisinau, Moldova

The Initiative for Policy Dialogue held a series of policy forums in Moldova from July 15th to July 23rd, 2002, in partnership with the Swedish International Development Agency (SIDA). The Dialogue brought participants together to discuss economic policy options, focusing on alternative strategies for Moldova's long-term development.

Moldova, a rural economy, experienced the worst transition of all CIS countries. Over the past decade GDP fell by more than 70%. In the mid-1990s, Moldova implemented a series of reforms that led to temporary economic stability, but did nothing to reduce poverty or lead to growth. Economic indicators in 2001, however, showed improvement; the government did not receive any credits from international financial organizations, foreign investment was minimal, and privatization income dropped. At the same time, GDP grew for only the second year since 1991, increasing by 6.1%. Policymakers, both those in government and those in the opposition, invited IPD to organized a Country Dialogue with the goal of exploring alternative solutions to development.

In 2002, IPD hosted the Dialogue with Nobel Prize winner Joseph Stiglitz, President of IPD; Shari Spiegel, Managing Director of IPD; Gerard Roland, Professor of Economics at the University of California, Berkeley and an expert on transition economies; David Ellerman, Economic Advisor to the World Bank's Chief Economist; and Manuel Montes of the Ford Foundation.

Partners

The Moldova Dialogue consisted of five days of meetings and roundtable discussions with various stakeholders, including President Voronin and other senior government officials, members of parliament, leaders of opposition parties, provincial mayors, academics, civil society groups, business community representatives, journalists, and members of the donor community. Anya Schiffrin, Director of the IPD Journalism Program, conducted a training session for journalists. Shari Spiegel and Nadia Roumani from IPD and Rebecka Kitzing and Nina Orlova from SIDA held two days of preliminary meetings with various civil society groups.

The first topic addressed in most meetings was how to replicate 2001 growth to achieve long-term sustainable development. Despite the fact that the country grew in a year characterized by minimal foreign investment, many participants in the Dialogue believed that foreign investment was still critical for future growth. The reality, however, is that Moldova is a net exporter of money and is unlikely to attract significant investment in the near future. Foreign debt is estimated to be approximately 150% of GDP, and debt servicing in 2002 is estimated to be nearly 75% of fiscal revenue. Without a significant debt write-off, Moldova will continue to export capital in the form of debt repayment. One point that came out in the discussions is that Moldova will most likely need to concentrate on ways to mobilize its own internal resources to achieve growth.

To answer the question of how to replicate the 2001 growth, participants tried to first understand the actual sources of the growth. Not surprisingly, there were different views as to why growth had turned around so dramatically. One view, held by the opposition, was that the current growth is the delayed effect of policies implemented by past governments. Others said that the high growth rate was tied to growth in Russia, and had little to do with policies in Moldova, whilst others claimed that the data was wrong, and that the statistics were unrealistic. The government argued that recent growth was due to recent policies.

Throughout the dialogue, three topics generated significant controversy and advanced debate; they included small enterprise development, rural development and debt restructuring.